Learn how to create a debt repayment plan, make payment arrangements with creditors, and choose the right strategy to become debt free.
A debt repayment plan is a structured approach to paying off what you owe. It involves working out how much you can afford, choosing which debts to prioritise, and making regular payments until you are debt free.
If you are feeling overwhelmed by debt, creating a clear plan can make a real difference. Instead of juggling multiple payments and worrying about which bill to pay next, a repayment plan gives you a single, organised approach. Many people find that simply having a plan in place reduces stress and helps them feel more in control.
You do not have to figure this out alone. A qualified debt advisor can help you assess your finances, negotiate with creditors, and find the most affordable way to clear your debts. This advice is completely free and confidential.
Millions of people across the UK manage debt every day. Seeking help is a positive step forward, not something to feel embarrassed about. The right repayment plan can help you take back control and work towards a debt-free future.
Follow these steps to build a plan that fits your budget and helps you clear your debts
Write down every debt you owe, including the creditor name, total balance, interest rate, and minimum monthly payment. Include credit cards, loans, overdrafts, and any other unsecured debts.
Calculate your total monthly income and essential outgoings such as rent, utilities, food, and transport. The difference is your disposable income, which is the amount available for debt repayment.
Decide whether to use the snowball method (smallest debts first) or avalanche method (highest interest first). Both approaches work well, so choose the one that keeps you motivated.
Reach out to each creditor to propose reduced payments based on your assessment. A debt advisor can do this on your behalf and often achieves better results, including frozen interest.
Arrange standing orders or direct debits for each creditor. Making payments on the same day each month helps you stay on track and shows creditors you are committed to repaying.
Check your plan every 3 to 6 months. If your income increases, consider paying more. If your situation worsens, speak to a debt advisor about adjusting your plan or exploring other options.
Two proven approaches to paying off debt. Both work, so choose the one that suits your personality and situation.
Pay smallest debts first
Focus extra payments on your smallest debt while making minimum payments on everything else. Once the smallest is cleared, roll that payment into the next smallest. This approach builds momentum and motivation through quick wins.
Best for: People who need early motivation and have multiple small debts
Pay highest interest first
Focus extra payments on the debt with the highest interest rate while making minimum payments on everything else. Once the most expensive debt is cleared, move to the next highest rate. This saves the most money over time.
Best for: People with high-interest debts who are motivated by saving money
Not sure which method to choose? Our advisors can help you decide based on your specific debts and goals.
Understanding the difference helps you choose the right approach for your situation
Debt Management Plan (DMP)
One affordable monthly payment distributed to all creditors. Flexible and no fixed end date.
Token Payment Plan
Very small payments (£1 to £5 per month) as a temporary measure during financial hardship.
Direct Negotiation
Contact creditors yourself to request reduced payments, interest freezes, or breathing space.
Informal arrangements are not legally binding. Creditors can still contact you and may not agree to freeze interest.
Individual Voluntary Arrangement (IVA)
Legally binding agreement to pay what you can afford for 60 months. Remaining debt written off.
Debt Relief Order (DRO)
For debts under £30,000 with low income. Debts written off after 12 months.
Bankruptcy
Legal process that writes off most debts. Typically discharged after 12 months.
Formal arrangements offer legal protection from creditors but have eligibility criteria and may affect your assets.
Compare the key features of different debt repayment options to find the one that suits you best
| Solution | Monthly Payment | Duration | Debt Written Off | Interest Frozen | Legal Protection |
|---|---|---|---|---|---|
| Debt Management Plan | Based on affordability | 5 to 10 years typically | No | Often, but not guaranteed | No |
| IVA | Based on affordability | 60 months | Yes, remaining balance | Yes, always | Yes |
| Token Payment Plan | £1 to £5 per creditor | 3 to 6 months | No | Sometimes | No |
| Debt Relief Order | Nothing | 12 months | Yes, fully | Yes | Yes |
Not sure which solution is right for you?
Get free adviceA realistic budget is the foundation of any successful debt repayment plan
Write down all your income and spending for a full month. This gives you an honest picture of where your money goes and highlights areas where you could cut back.
Always cover rent or mortgage, council tax, utilities, and food before debt payments. Your debt advisor will help you work out priority and non-priority debts.
Try to keep a small amount for unexpected costs. Even £20 to £30 per month can prevent you from falling behind on your plan when surprises come up.
Review subscriptions, switch energy providers, use cashback apps, and plan meals in advance. Small savings add up quickly and can be redirected towards debt repayment.
Common questions about creating a payment plan and working with creditors
Our advisors will help you assess your finances, contact your creditors, and build a repayment plan you can actually afford. All advice is free, confidential, and completely without obligation.
Free advice. No pressure. Confidential service.
One affordable monthly payment for all your unsecured debts. Flexible and ideal for homeowners.
Temporary small payments when you cannot afford your normal monthly amounts.
Learn how to get interest and charges frozen on your debts to help you pay them off faster.
A formal agreement to pay what you can afford for 60 months, with remaining debt written off.
Access free, confidential debt advice from qualified advisors across the UK.
Practical help and support if you are finding it hard to keep up with debt payments.